Twenty years of progress?

There is no shortage of conflicting views on the single market. Some people regard it as the greatest achievement of the European Union. Others doubt that it exists. Some credit it with doing more to bring its peoples together than any other development in post-war history. Others maintain that it is a painful and all-too-clear illustration of the EU’s inability to join up fragmented markets and establish the most basic of common standards. There will be plenty who approach next month’s ‘20th anniversary’ celebrations with some weariness.

The celebrations are as much to do with wanting to inject the single market with fresh impetus as marking a true starting-point. The 20th anniversary is an approximation to what was, back in 1992, a deadline. The single European act actually took effect in 1987. It was inspired by the report drawn up in 1985 by the then European commissioner for the internal market Arthur Cockfield. That report set out 297 measures that were needed to complete the single market by the end of 1992. From 1986 to 1992 the EU adopted nearly 280 pieces of legislation aimed at breaking down the barriers between member states. What the 20th anniversary celebrations are trying to re-create is the atmosphere of those formative years during the European Commission of Jacques Delors, and the widespread awareness of “1992”, which in the business world took on an almost millenarian image.

Changing times

But how to achieve fresh impetus? Much of the early innocence about the single market’s potential has faded. Some of its ideals are in tatters. The dream of cross-border consolidation between large banks to provide deeper and more liquid capital markets is tarnished. Banks have had to be bailed out, broken up and nationalised. They have withdrawn from cross-border lending to retrench on their domestic markets. The idea of a unitary patent, which has been talked about longer even than the single market itself, lingers frustratingly on the drawing board (see page 16). The European single currency, which was meant to realise the single market’s potential, instead threatens to undermine it. The wave of austerity that has swept across the continent tempts member-state governments into protectionism, state aid, and other behaviour antithetical to a single market. Anti-EU parties have capitalised on the eurozone’s difficulties – and even mainstream parties are tampering with the freedoms of the Schengen area of borderless travel that once epitomised the achievements of the single market.

More subtly, the spectre of an EU of variable speeds is up and running and threatening the uniformity of a single market. The rancour of the European Council of 8-9 December, when David Cameron, the British prime minister, blocked treaty change after failing to win exemptions from financial service regulation, brought home the extent to which the member states fall short of a common vision of the single market. Proposals for a banking union that the Commission published yesterday (12 September) (see page 20) will be a formidable challenge: How can a single eurozone banking supervisor be made compatible with the EU’s single market? The UK suggests that tighter European integration conflicts with the freedoms of the single market. Much of the rest of the EU argues the opposite.

But with pressure come opportunities. Michel Barnier, the European commissioner for the internal market, has set in motion an unprecedented conveyor belt of financial-service legislation that would scarcely have been thinkable five years ago (see pages 18-19). Using the crisis to justify the introduction of tighter, more uniform regulation across the EU, the results might yet create a real and credible single market in financial services.

Digital economy

Progress in other areas is no less essential. “The area which has evolved dramatically since 1992 is the huge potential of the internet as a digital economy for enhancing the potential of the single market,” says Malcolm Harbour, a British centre-right MEP who chairs the European Parliament’s committee on internal market and consumer protection. “It also brings into sharp focus where we have problems. On things like copyright and [orphan] works and the ability to source digital products across borders.”

He says that technology has altered people’s perception of how the single market can benefit them. “People are doing more remote transactions and they want to be able to pay and to have their data secure – and data protection which would have been seen as a civil liberties issue is now a crucial single market issue as well,” he says.

In the age of the internet, people will not wait for the legislation. Policymakers know that if the single market is to boost Europe’s competitive place in the world, they must put in place a rigorous process for completion, and, as Harbour says, for ensuring that it is applied and promoted in member states. He and other EU politicians and officials know that proposals to overhaul Europe’s copyright regime, to establish alternative dispute resolution laws, to enable the mutual recognition of professional qualifications, and to carry out a revision of public procurement rules are of pressing importance: without economic growth there will be no solution to the eurozone crisis.

As well as leading the celebrations, the European Commission will set out a further list of items under its ‘single market act’ blueprint to revitalise the single market next month. But the conflicting visions of what the single market is for will have to be reconciled before the level of enthusiasm for the project can come anywhere close to that of 20 years ago.